Reblog: Peter Lynch Investment Tips


This is an oldie but goodie – Peter Lynch on how to pick stocks. By chance, we were also doing the Lynch book list and ran into some confusion if anyone knows please let us know

Here are the obvious three

One Up on Wall Street Peter Lynch 1989
Beating the Street Peter Lynch 1993
Learn to Earn Peter Lynch 1995

The Davis Dynasty: Fifty Years of Successful Investing on Wall Street says its by John; Peters S. Lynch (foreword) Rothchild, I would assume the foreword for a book about Shelby Davis would be the investor Peter Lynch but we were unlear if he had a middle S initial (or if he did not, is that a typo? – obviously can read the book itself but hard to find some of these out of print books and we only have so much time and rsources) in the end we were not sure so would want to exclude it. We will have our list for better or worse soon. We also transcribed the following video – it is not verbatim and is for information purposes only

Enjoy

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Reblog: Some Mistakes…


So much has been written about vicarious learning i.e. learning from mistakes of others. It is humbling to admit that despite all the knowledge out there, I failed to learn vicariously. The purpose of writing this piece is to put down the learning’s (very expensive ones) over the last decade or so.  I hope to smarten up in the future though.

Before writing about what did not work, it is important to set the context. There is no best or the right way to invest – investors have successfully generated huge returns from different investing strategies – be it buying and holding quality companies, chasing growth even at high valuations, buying cheap companies betting on turnarounds etc. People have made large amount of wealth by having concentrated as well as diversified portfolio. So investors have to explore what works for them, given their financial requirements, temperament, skill and time horizon.

Two important factors to consider while looking at the mistakes (and lessons) are:

  1. Allocation strategy: diversified or concentrated. I go with a concentrated strategy so these mistakes are more relevant in that context.
  2. Portfolio approach: It is important to look at the portfolio return and how the portfolio is structured. This is different from trying to maximize returns from each individual stock.

The major mistakes (with very high opportunity cost) made over the past years:

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Reblog: 13 Simple Rules for Better Investing


The fund industry has grown massively in the last 25 years, and it has changed to a better-run, more professional, and lower-cost business, Here are some key lessons for investors:

  1. Build a plan for multiple investment goals and stick to it.
  2. Align your investments with each goal.
  3. Keep costs low, but evaluate whether some services like paying for financial or tax advice are worth the price if you don’t have the time or investing acumen to do it yourself.
  4. Choose funds that are good bets for five years from now because they have the depth of managers and analysts, low costs, and strong stew­ardship to keep them on the right path.
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Reblog: Why Having A Trading Routine Is Vital To Your Success


I think we can all agree that habits are what determine our success or failure in any endeavor, trading included. So, how do we go about developing the type of habits that will lead us to profitable trading?

The answer: Routine.

Proper trading habits do not just magically appear out of thin air (unfortunately). They can sometimes take years to form. However, luckily for you, you have the power to put into motion a plan that will bring forth the proper trading habits sooner than otherwise possible. The development of positive habits, the ones that lead to success in any field, is something you can make a conscious effort to achieve simply by implementing consistent daily routines.

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Repost: How not to fail in stock markets – 11 lessons from Rakesh Jhunjhunwala


Rakesh Jhunjhunwala is widely referred to as the Indian Warren Buffett. The investment maestro is very popular for picking up stocks that could turn into multibaggers, based on his own study of fundamentals and research models. Rakesh Jhunjhunwala is a Chartered Accountant by qualification and a trader by profession.

With the stock markets on fire of late, many investors who could not invest before the bull run began must be wondering if they have missed the rally, for the benchmark indices Sensex and Nifty have already returned about 20% each so far this year. But worry they must not, for, here we take a look at 11 key lessons on the stock market from the big bull investor himself, which may help investors to stop failing in the stock markets, cut losses, and turn profits.

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Reblog: 9 books about financial markets you really should read


Earlier this week I wrote (again) about the importance of understanding financial market history. This prompted a few people to ask for some of my favourite books on the topic. Here goes:

Devil Take the Hindmost: A History of Financial Speculation

If I had to pick just one book to read on the topic, this would be the one. Edward Chancellor weaves history, psychology, and economics beautifully in what is also one of the better-named finance books I’ve come across.

The Panic of 1907: Lessons Learned From the Market’s Perfect Storm

The story behind the banking crisis most people probably aren’t familiar with. This book shows how primitive the financial markets were before banking regulations and the Fed came around.

The Great Depression: A Diary

This first-person account of what life was like during the Great Depression is not only a lesson in financial market history but also how difficult that period in history was for those living through it. I can’t recommend this one enough.

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Reblog: The Importance Of Time Horizons For Investing (And Beyond)


The Importance of Time Horizons

 When it comes to evaluating market risk, your time horizon is a key factor to consider. As a general rule, shorter time horizons require more caution than do longer ones. I would also argue, however, that this concept applies to many areas of investing—and beyond.

Long-term investing

Let’s start with why longer-term results can be more predictable than shorter-term ones. The answer is, simply, averaging. One data point might be noisy, but as you accumulate more and average them, the outliers tend to offset each other. As a result, the signal starts to dominate the noise. The more data points you have, the closer you get to the expected result. Investors with 40 years, for example, can look at longer-term return goals with a reasonable expectation of actually getting them. But for shorter time frames, the noise can dominate. Hence, the extra caution needed as you get closer to retirement.

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Reblog: 8 step basic fundamental analysis for beginners


In this post I will present a simple 8 step fundamental analysis template which can be used to analyze if a a stock is investment-worthy or not.

For any stock to merit investment, the most important thing is the financial stability of the business. It is important that a company has manageable debt levels and generates enough operating profits to easily pay interest on its loans and has sufficient cash for day to day operations while delivering decent growth in revenues and profits.

I use the first four ratios described below to assess the financial stability of a company when i consider investing in its stock.

  • Long term Debt/Equity Ratio 
    Debt/Equity Ratio is a debt ratio used to measure a company’s financial leverage, calculated by dividing a company’s total liabilities by its stockholders’ equity.
    Companies (excluding financial institutions) with D/E of less than 1 to be stable and can easily cope with short term downturns as they have higher reserves than what they have borrowed.
    D/E= Sum of non current debts/Shareholder Funds.

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Reblog: Why You Should Take the Profits and Run!


This article is for those traders (new or experienced) who have trouble booking profits. Do you often see large profits evaporate as the market reverses against you, leaving you feeling powerless and confused? If so, you know how frustrating it can be and you know exactly what I’m talking about.

Poor target placement, lack of experience, greed, arrogance and stubbornness are all issues that can cause traders to not take profits off the table.

I appreciate this article may conflict with some of my core beliefs and teachings on taking profits since typically I encourage people to aim for a 2 to 1 risk reward or greater and to set and forget stops and targets. In theory, this makes sense, but in the real world, as you likely already know, there are still a great number of trades that almost hit your profit target or where a trade has moved quickly in the right direction and you’re staring at a giant profit… and then the next day or week, the market goes the other way and your once giant profit has become a much smaller profit or even a loss.

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Reblog – How Anne Scheiber built a fortune?


Anne Scheiber was born in 1893.  Her father died when she was very young.

Due to poverty, she began to work in her teen years, saved money and graduated from law school. She joined IRS. IRS is ‘Internal Revenue Service’. It is the income tax department of US government.

Being a Jew and a woman in the early part of last century, she faced a lot of discrimination. She excelled in her work. But during her 23-year career, she never got a promotion due to discrimination. She retired in 1944 with a retirement corpus of $5000.

Though she retired at the age of 50, she lived until the age of 101; passing away in 1995.

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